Countrywide PLC (LON:CWD) has agreed to sell its commercial property arm Lambert Smith Hampton and plans a share consolidation as part of the estate agent's plans to strengthen its financial position.
As part of the proposed deal, private investor John Bengt Moeller will pay £38mln cash for LSH, which Countrywide has deemed "non-core", which is six times the division's yearly adjusted underlying earnings.
Bengt Moeller is founder and director of Great Global Holdings Ltd, a private company in the real estate space operating across the US, UK and Europe
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The transaction, expected to be completed on 31 December subject to approval from shareholders at a meeting "to be held in due course", will allow Countrywide to reduce its debt.
The property group is also proposing a 50-for-one share consolidation, meaning every 50 existing ordinary shares of 1p will be re-assigned into one new ordinary share of 1p and 49 deferred shares of 1p.
“The sale of the Lambert Smith Hampton commercial business strengthens the group,” executive chairman Peter Long said in a release.
“Once completed, we believe that the group will be in a more advantageous position in our core residential market. The group remains on course to deliver a full-year result in line with the board's expectations.”
Countrywide's shares, having crashed 97% over the past four years, jumped 15% 5.35p on Friday morning.